Social Commerce Series: Opportunities and Challenges for Brands

This is the second post in our series on social commerce. For a primer on social commerce, go here.

Some of the world’s biggest brands—Sephora, Nike, and Samsung, to name a few—now sell products directly on social media platforms and within social-first commerce marketplaces. As these social and creator storefronts become more mainstream, new shoppable content formats have also emerged—giving brands completely new ways to tell stories around their products and inspire people to purchase.

Brands can no longer afford to ignore the facts about social commerce

The market is rapidly expanding, and the potential for growth is immense.

• Between 2021 and 2023, the number of U.S. social shoppers rose from roughly 97 million to nearly 107 million.

• Forecasts indicate that the Gross Merchandise Value of social commerce will approach $150 billion by 2028, more than 50% more than the estimated value for 2024.

• About half of social media users aged 18 to 41 years old had made at least one purchase through social in the previous year.

For brands looking to test social commerce, there’s a lot of opportunity and some considerations to factor into the decision. Here’s a look at the great promise—as well as some watchouts—of this fast-evolving shopping experience.

What’s great about social commerce

Social platforms have adapted to consumer expectations by building commerce features directly into the core experience and user interface.

Today, Facebook, Instagram, TikTok, and Snap host branded shops where users can search for products and collections inside the brand’s profile. They also offer dozens of shoppable content formats, allowing consumers to click on a post or video and instantly see the featured product, its price, and other details, and even check out right within the app. These platforms provide dedicated shop managers for brands and agencies to track sales, customer data, and popular shopping times. With these tools, brands can more flexibly manage product catalogs and showcase different products or collections based on daily or weekly trends. YouTube, Pinterest, and even Reddit have also launched their own versions of shoppable experiences.

Additionally, numerous social-first commerce marketplaces have cropped up. For instance, there’s Flip, a social shopping app that allows brands to set up shops and sell products directly to a vibrant community of shoppers and creators, using user-generated content to boost sales. Then there’s TalkShopLive, which allows brands to simulcast live shopping experiences with creators to almost any platform, enabling viewers to purchase products right within their stream via integrated retailers. Another notable player is Klarna’s Creator Platform, which helps brands connect with the right influencer partners, collaborate on content, and sell products through influencer shops. It also provides insights into performance metrics to track and optimize these relationships.

What’s propelling this market explosion comes down to a handful of highly effective experiences that are key to driving sales from social shopping, including:

• Store setup
  Various platforms offer tools and resources, like “seller centers,” to guide brands through the process of launching a shop step by step. However, this process can still be arduous, and we strongly recommend engaging Razorfish for assistance.

  Typically launching involves creating or switching to a business account; verifying your identity by uploading official documents like a passport or driver’s license, registering as a “seller” with your banking information, and connecting your social shop to your existing online store via commerce platforms like Shopify, Adobe Commerce, or Big Commerce.

  While setting up social shops is typically free, there are still costs to account for like transaction fees per sale and other potential costs like marketplace commission fees.

• Creator integration
  Platforms are harnessing the power of influencers and their extensive reach by enabling shopping directly from creators’ profiles and shops.

  These platforms are also facilitating seamless brand-creator partnerships within the app through “creator marketplaces,” making it super easy for brands to connect with authentic influencers to drive product sales.

  And several platforms like YouTube, TikTok, and Amazon are investing heavily in implementing built-in affiliate programs that allow creators to earn commissions based on the total sales they generate for a brand. The global affiliate marketing industry is worth close to $16 billion today and is projected to grow to $40 billion by 2032.

• Live shopping
  Platforms are taking cues from other countries (mainly China) and betting big on live shopping, allowing users to shop directly from a live video from a brand or creator.

  By 2026, sales from live social shopping are projected to grow by 36% and account for more than 5% of total e-commerce sales in the U.S.

  Live shopping on social channels is not only convenient, but it pays off, too. Gen Z-ers especially gravitate to this mode of shopping because of exclusive discounts, entertainment factors, or because it’s another way to get inspired by an influencer or creator they love. Plus, they can engage through comments in real time—making them feel a part of the experience.

• Virtual try-ons
  Some platforms—Meta, Snap, and Amazon—are leveraging augmented reality (through your phone’s camera lens) to let shoppers virtually try on the product or put the product in their space to see if they like it, and then purchase right from within that experience.

  While brands have been slower to adopt these features, it’s not slowing consumers down.

  Virtual try-ons, according to Retail Dive, can increase sales conversion by 2.5 times. They can also help customers make more informed decisions, which can reduce return rates by 64%.

• In-app checkout
  Nearly all platforms—Facebook, Instagram, TikTok, and Pinterest—now allow shoppers to check out directly within the social platform using whatever payment method users have saved into their digital wallets.

  Younger consumers, in particular, are embracing in-app shopping, as it allows them to transition seamlessly from inspiration and browsing to shopping and purchase—without the inconvenience of being redirected to an external website. Earlier this year, Facebook and Instagram advanced this trend by announcing that it will only support their checkout experience, discouraging brands from driving outside of the platform to their website.

• Fulfillment help
  Social commerce can be particularly daunting without the necessary resources to manage increased product demand across multiple sales channels. That’s where fulfillment services from the platforms themselves come in.

  For example, TikTok has introduced Fulfilled by TikTok (FBT) to help sellers package and ship their TikTok orders directly through TikTok Shop. This initiative, similar to Amazon’s fulfillment services, allows shoppers to combine products from multiple FBT shops to meet the minimum threshold for free shipping.

  Additionally, TikTok has partnered with ShipBob, a leader in AI-driven fulfillment solutions. This collaboration, the first of its kind in the U.S. for FBT, provides sellers access to an extensive network of fulfillment centers.

Many brands remain cautious about taking the leap and testing social storefronts despite the growing evidence supporting the acceleration of social commerce. And to some extent, their hesitation is understandable given the challenges associated in implementing social commerce experiences across various platforms.

Where social commerce still needs work

• Discoverability
  Most platforms have keyword-based search, enabling users to sift through hundreds of videos, photos, hashtags, and profiles. However, these search functionalities aren’t yet fully optimized for finding specific products from specific brands. That means brands must rely on paid media and shoppable ads to boost product discoverability, which can be challenging for those with smaller marketing budgets.
• Data ownership
  Unlike traditional ecommerce websites where brands have full access to consumer data, social commerce platforms own the data. Currently, many of the management platforms behind these social commerce features offer limited insights. And the data is not nearly as comprehensive as you might receive from a more advanced ecommerce-tracking partner.
• Product inventory & multi-shop management
  Managing multiple stores, across multiple countries, in multiple languages on multiple platforms … is, well, a lot. Brands often grapple with optimizing product inventory across multiple storefronts and navigating technology hurdles of managing multiple systems. A unified management tool or interface, though currently rare, would be crucial for streamlining operations.
• Customer service and support
  While social commerce is quick and convenient, it currently lacks robust features for handling customer inquiries. However, with ongoing developments, particularly in AI, significant improvements in customer support are expected within the next 12 to 24 months.
• Benchmarks
  Social commerce currently lacks established performance standards and comprehensive data, making it difficult to gauge true selling power. Future developments in analytics tools by third-party platforms are anticipated to provide a more holistic view of product performance across storefronts.
• Selling fees
  As social commerce becomes more widespread, platforms are likely to increase their selling fees. These fees can reach up to 5% per shipment, which, although lower than some larger ecommerce platforms like Amazon, may rise as more users and brands adopt social shopping.

Regardless of these growing pains, social commerce is here—and it is staying

Social platforms will gain a deeper understanding of consumer preferences in the social buying experience, and brands will increasingly push for standardization. As digital wallets advance to accommodate alternative payment methods like cryptocurrency, purchasing on social platforms will become even more seamless and flexible. Brands that fail to embrace and experiment with social commerce now risk falling behind in this rapidly evolving landscape.